Cash For Clunkers Program In China Will Boost Electric Car Industry As EU Tariffs Bite

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The cash for clunkers program in China is designed to get more people to buy an electric car and trade in a gas hog at the same time.

The government of China announced last month it would double trade-in subsidies first introduced in April in an attempt to boost demand for cars after sales growth slowed in the first half of the year. China’s cash for clunkers trade-in program could increase consumer demand for EVs in the coming months, driving total electric car sales to more than 10 million this year, according to

The Chinese government initially budgeted 11.2 billion yuan for the trade-in program, enough to support replacement of up to 1.6 million vehicles with more efficient gasoline cars, or 1.1 million EVs, BNEF analyst Siyi Mi wrote in a report published Monday. While the new funding total hasn’t been disclosed, BNEF assumes the targeted number of replaced vehicles will remain similar, with higher subsidies potentially spurring up to 2 million car sales, Mi said.

Increased uptake of the cash for clunkers incentive would be a welcome relief for Chinese EV makers, who have been battered by a prolonged price war and are facing increasing hostility abroad. Both the US and European Union have recently imposed substantially higher tariffs. The US tariffs have had a negligible effect on Chinese automakers because very few Chinese made cars are sold in America.The tariffs have sent the Volvo EX30 into a tailspin, however.

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